New Research by Algorand Foundation: TVL Could Easily Become a Game

According to a report by Jinse Finance, the Tokenomics team of the Algorand Foundation has released a new study questioning one of the most cited metrics in the cryptocurrency field—Total Value Locked (TVL). This report provides the strongest evidence to date that, despite TVL's prominent position in various dashboards, news headlines, and investor profiles, it does not impact the financial performance of tokens. A recent analysis of over 300 cryptocurrencies (excluding Bitcoin and stablecoins) for the period 2023-2024, led by Dr. Matthew Brigida, Associate Professor of Finance at the State University of New York Polytechnic Institute and Chief Economist of the Algorand Foundation, found no evidence that TVL can predict the value performance of tokens. The research team created weekly portfolios, ranking tokens based on TVL, and held the top 25% while shorting the bottom 25% to test whether a high TVL minus low TVL portfolio could generate excess returns (Alpha). The results showed that they did not.